Local preference opponents lose court challenge

Ray Nelson, a foreman with MJ Construction Inc., Milwaukee, uses a skid steer recently to grade and remove gravel in preparation for concrete resurfacing at 68th Street and National Avenue in West Allis. Milwaukee-based MJ is at the heart of a local-bidder preference lawsuit. (File Photo by David La Haye)

Sewer contractors opposing Milwaukee’s local-bidder preference lost Monday in a challenge of the law.

Milwaukee County Circuit Court Judge William Pocan ruled the city of Milwaukee does not have to analyze the construction market to determine if contractors are making an unreasonable profit under the local-bidder preference law.

According to Pocan’s ruling, requiring such a study is “impractical and could result in significant waste of taxpayer dollars.”

The ruling was the final piece of a lawsuit American Sewer Services Inc., Rubicon, and United Sewer & Water Inc., Menomonee Falls, filed in October after losing contracts to Milwaukee-based MJ Construction Inc. because of the local-bidder preference.

The city law gives Milwaukee-based companies a 5 percent bidding cushion, with a cap of $25,000, when bidding on city contracts.

Pocan ruled April 26 the city can apply the preference to sewer and water projects that receive low-interest loans from the state’s Clean Water Fund. Monday’s decision was the final point of contention in the lawsuit for the judge to rule on.

Joseph Olson, the attorney representing American Sewer and United Sewer, in April called on the city to analyze bids from contractors relying on local preference to prove Milwaukee does not give those builders a higher profit margin than the industry average. Olson said Monday his clients had wanted their lawsuit to at least prompt a study of profit margins.

“If the city was required to do such an analysis,” he said, “it may realize that on some projects, it does lead to unreasonable profit.”

Olson rejected the judge’s argument that requiring a study of profit reasonability would take more time and cost more money, saying, “this is a burden the city imposed on itself when it made this law.”

“There is a lot of extra work that comes out of this (local preference law),” he said.

American Sewer and United Sewer still were mulling whether to appeal the case after Monday’s hearing, Olson said. Dennis Biondich, president of American Sewer, could not be reached for comment.

Scott Maly, vice president of United Sewer, called the judge’s decision “unbelievable.”

Maly is due in municipal court Wednesday for a hearing to on a protest he filed with the Milwaukee Public Works Department concerning the department’s decision to award MJ Construction a bid for sanitary and storm sewer work even though American Sewer was the low bidder. The city applied the local preference law in making the bid award, Maly said.

In a June 22 letter of protest to Jeffrey Mantes, commissioner of public works, Maly asked for data proving MJ is not profiting unreasonably. Maly also requested the award be reversed and the bid given to American Sewer.